Gautam Adani’s follow-on public offer (FPO) for flagship Adani Enterprises squeaked through on Tuesday as a group of investors emerged on the final day to take the share flotation over the line.
The issue was oversubscribed by 12 per cent, receiving bids for 5,08,68,352 shares.
The sale of 4.55 crore shares through the FPO had seemed to be at great risk of failure after US-based short seller Hindenburg Research came out with a report that accused the Adanis of stock price manipulation and funnelling funds into the group companies from murky entities based in offshore tax havens.
All through the day speculation swirled about the identities of the investors who had stepped in to rescue the issue after a roughly Rs 5.5-lakhcrore ($65-billion) rout in the valuation of the group’s listed entities that was precipitated by the Hindenburg report.
Non-institutional investors (NIIs) — a category that encompasses a motley bunch of firms, high networth individuals, eligible NRIs, Hindu undivided families (HUFs), societies and trusts — stumped up bids for 3,19,30,848 shares, roughly 3.32 times the 96,16,323 shares earmarked for them.
The stock market was agog with talk that Mukesh Ambani of Reliance Industries, Sunil Bharti Mittal of Bharti Airtel, Sajjan Jindal of JSW group and Pankaj Patel of Zydus Life were among the big non-institutional investors who had put up money in their personal capacities.
The names could not be confirmed. If each has bought less than 1 per cent of the equity, they will not have to make a disclosure to the stock markets.
“If this news is correct, it shows that India Inc is rallying in support of one of its own despite their rivalry,” said a stockbroker who did not wish to be quoted.
The NIIs were followed by qualified institutional buyers (QIBs) who scooped up 1,61,03,776 shares -– or 1.26 times the 1,61,03,776 shares reserved for this category.
Retail investors and several Adani group employees had shunned the issue because the stock had plunged below the FPO floor price of Rs 3,112 per share after the short-seller’s report.
On Tuesday, the stock rose briefly to a high of Rs 3,072.95 on the BSE — still 1.25 percent adrift of the floor price— but soon tumbled to close at Rs 2,975.
Retail investors subscribed to only 27,45,960 shares, or12 per cent of the 2.29 crore shares reserved for them. Adani group employees picked up 87,768 shares, or 55per cent of the 1,60,668 shares earmarked for them.
Observers said Abu Dhabi fund International Holding Company’s investment of Rs 3,260 crore in the issue had restored the confidence of the non-institutional investors in the Adani group, which must now deal with the reputational damage caused by the Hindenburg report.
Last week, before the FPO had opened, anchor investors, including Maybank Securities, Abu Dhabi Investment Authority, HDFC Life Insurance and the Life Insurance Corporation, had picked up 30 percent of the shares on offer.
The success of the FPO means that Adani Enterprises will now be able to put the Rs20,000 crore raised to immediate use.
The prospectus to the issue had said the group intended to spend Rs 10,869 crore to fund the group’s capital expenditure in the green hydrogen ecosystem, improvement of facilities at some of the airports that the group operates, and the construction of a greenfield expressway.
Another Rs 4,165 crore from the net proceeds of the issue will be used to repay the borrowings of Adani Enterprises and three subsidiaries: Adani Airport Holding Limited, Adani Road Transport Limited and Mundra Solar Ltd.
The group will also use about 25 per cent of the net proceeds for general corporate purposes.
